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Japan's Lower House Election

December 15, 2014

On December 14 Japan’s ruling coalition won a convincing victory in an election for the Lower House of the Diet (parliament), consolidating Prime Minister Shinzo Abe’s power and raising expectations for his policy agenda centered on economic revitalization. Abe called a snap election last month, two years earlier than necessary, to hold what he deemed a referendum on his economic growth strategy known as “Abenomics” and to pressure weak opposition parties that struggled to introduce alternatives to his vision. With the election hurdle cleared, the political debate in Japan will now focus on how Abe chooses to allocate political capital across a range of policy priorities including economic reforms considered vital for sustainable growth.

Q1: Why did Abe call a snap election now?

A1: Abe’s decision to dissolve the Lower House caught political observers by surprise given that the government had just issued data suggesting the economy had fallen back into recession and his average public approval rating had fallen below 50 percent. Despite apparent economic headwinds, Abe chose to double down on his three-pronged agenda of monetary easing, fiscal stimulus, and structural reform and force the opposition Democratic Party of Japan (DPJ), still reeling from a debilitating loss in the last election two years ago, to mobilize on short notice. Though seemingly defensive in nature, the call for a snap election reflected a strategy to weaken a fractured opposition and extend the timeframe for Abe to pursue his growth strategy and other policy priorities.

Q2: Did the election gamble pay off?

A2: Abe’s ruling Liberal Democratic Party (LDP) lost a few seats but together with the Komeito (Clean Government Party), a junior coalition partner, secured a two-thirds majority in the Lower House that will smooth the passage of legislation introduced by the Abe government. The DPJ picked up seats but the party president and some other leaders were defeated at the polls. Voter turnout was at an all-time low, which some analysts attributed to ambivalence about Abenomics. Questions about public support notwithstanding, Abe’s election gamble paid off in that the political calendar works in his favor. As a result of this snap election the next Lower House poll is now notionally scheduled for 2018, and if Abe successfully leads his party through nationwide local elections next spring and prevails in the LDP presidential race scheduled for next fall, he need not face another poll until the next Upper House election in summer 2016. Abe is under pressure to deliver economic growth and could stumble along the way, but he is positioned to benefit from a window of political stability unrealized since Junichiro Koizumi served as prime minister from 2001-2006. Indeed, Abe stands out among the G-7 leaders for his likely political longevity and relative popularity.

Q3: What’s on Abe’s policy agenda?

A3: Abe could reshuffle his cabinet in the next couple of weeks and his government will likely introduce a supplementary budget to provide short-term economic stimulus and finalize a budget for the fiscal year beginning next April, which will be subject to debate when the Diet reconvenes in January. The Abe government is also preparing legislation related to his decision this past summer to reinterpret the constitution to exercise the right of collective self-defense, and parliamentary debate on that issue will likely commence next spring after nationwide local elections. Abe is also likely to move forward with a partial resumption of nuclear power, a politically sensitive issue that features in the debate over Japan’s future energy mix. But the first priority, as Abe noted in post-election interviews, is economic revival and his growth strategy will face increased scrutiny.

Abe is in the middle of an unresolved debate among bureaucrats about the balance between fiscal consolidation (Japan’s debt-to-GDP ratio exceeds 200 percent) and economic stimulus, but recently was forced to favor the latter after weak economic data led him to postpone a scheduled increase in the consumption tax until 2017. Structural reform (dubbed the “third arrow” of Abenomics) is also a controversial subject and it is not yet clear whether Abe will pursue this element of his agenda with greater urgency or favor an incremental approach, which could invite speculation about backsliding on reform. The nature and pace of Abe’s economic reform agenda, specifically his approach to the Trans-Pacific Partnership (TPP) trade negotiations, will likely drive the headlines in the weeks ahead. Bilateral negotiations on TPP shifted to lower gear during the election cycle, but President Obama’s public statements in the first week of December pledging movement on TPP and Trade Promotion Authority (TPA) have put pressure on Japan to close the remaining gaps in the U.S. and Japanese positions this spring. TPP was not a major issue in the election and the ruling coalition’s victory puts him in a stronger position to move forward on sensitive issues such as agriculture. Some commentators have suggested that the election victory may steer Abe away from economics toward other issues such as revising the constitution that featured prominently during his previous term as prime minister in 2006-2007. Abe is interested in making movement on constitutional revision, but is sending much stronger signals that he intends to focus on the economy first.

Q4: What are the implications for the United States?

A4: This window of political stability in Japan presents opportunities to strengthen the U.S.-Japan alliance. Bilateral trade negotiations linked to TPP are at a critical stage and if concluded will not only enhance the economic competitiveness of both countries but also ensure joint leadership in setting high standards for trade throughout the Asia Pacific region. Similarly, defense policy reforms that would allow Japan to exercise collective self-defense stand to deepen bilateral defense ties and facilitate cooperation with other countries in the region. Abe will seek to shape the domestic political debates on these issues in line with a strategy to enhance Japan’s leadership role in economic and security affairs that is fundamentally in U.S. interests.

Michael J. Green is senior vice president for Asia and holds the Japan Chair at the Center for Strategic and International Studies (CSIS) in Washington D.C. Nicholas Szechenyi is deputy director and senior fellow at the Japan Chair and Matt Goodman holds the William E. Simon Chair in Political Economy and is senior adviser for Asian Economics at CSIS.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).